I read a review about "Capital in the twenty-first century" by Thomas Piketty.
This is the link to the review:
http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/
The central thesis is that wealth
will accumulate if the rate of return on capital is greater than the rate of
economic growth. Over the long term, Piketty argues, this will lead to the
concentration of wealth and economic instability. Piketty proposes a global
system of progressive tax and transfer to help create greater equality and avoid
the vast majority of wealth coming under the control of a tiny minority.
The central thesis of the book is that
inequality is not an accident, but rather a feature of capitalism, and can only
be reversed through state intervention. The book thus argues that unless
capitalism is reformed, the very democratic order will be threatened.
He bases his argument on a formula that relates
the rate of return on capital (r) to the rate of economic growth (g) , where r
includes profits, dividends, interest, rents and other income from capital; and
g is measured in income or output. He argues that when the rate of growth is low
then wealth tends to accumulate more quickly from r than from labor, and tends
to accumulate more among the top decile and centile, increasing inequality. Thus
the fundamental force for divergence and greater wealth inequality can be summed
up in the inequality r> g. He analyzes inheritance from the perspective of
the same formula.
This is the link to the review:
http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/
The central thesis is that wealth
will accumulate if the rate of return on capital is greater than the rate of
economic growth. Over the long term, Piketty argues, this will lead to the
concentration of wealth and economic instability. Piketty proposes a global
system of progressive tax and transfer to help create greater equality and avoid
the vast majority of wealth coming under the control of a tiny minority.
The central thesis of the book is that
inequality is not an accident, but rather a feature of capitalism, and can only
be reversed through state intervention. The book thus argues that unless
capitalism is reformed, the very democratic order will be threatened.
He bases his argument on a formula that relates
the rate of return on capital (r) to the rate of economic growth (g) , where r
includes profits, dividends, interest, rents and other income from capital; and
g is measured in income or output. He argues that when the rate of growth is low
then wealth tends to accumulate more quickly from r than from labor, and tends
to accumulate more among the top decile and centile, increasing inequality. Thus
the fundamental force for divergence and greater wealth inequality can be summed
up in the inequality r> g. He analyzes inheritance from the perspective of
the same formula.